Hi John,
We use Mocrosoft Word & then output to PDF.
Word is actually a pretty good "container" to put most things into - accepts most items as a visible object, including solidworks, acad, jpg, whatever and has the ability to annotate over the object with Word objects (lie callouts). Its searchable, has table & link creation abilities, converts to html with ease (hence searcable), and most of all not too expensive or hard to learn.
PDF works even better for stability and easy distribution, but a source doc is needed to create the PDF (word for us).
For what it's worth - I like these two together because they are stable, reliable, inexpensive and likely to be around in 10 years. I'm sure there are better products and taken point by point, both of these might easily be laughed at.
Regards,
SMA